Rumo S A : Comunicado ao Mercado

REPORT ON CLIMATE CHANGE RUMO S.A. 2023

TASKFORCE ON CLIMATE-

RELATED FINANCIAL

DISCLOSURES (TCFD)

REPORT ON CLIMATE		EXECUTIVE		MANAGEMENT OF		METRICS	FINAL		APPENDIX A: TCFD	2
INTRODUCTION	GOVERNANCE	CLIMATE-RELATED RISKS	STRATEGY	REFERENCES
CHANGE 2023	SUMMARY	AND GOALS	CONSIDERATIONS	SUMMARY TABLE
		AND OPPORTUNITIES

CONTENTS

1.	INTRODUCTION				05	APPENDIX A: TCFD SUMMARY TABLE					31
1.1. About the report					05			Governance								31
				Table 1
												Management of climate-related risks
										Table 2
2.	EXECUTIVE SUMMARY					07			and opportunities					32
												Strategy					33
3.	GOVERNANCE						09	Table 3
							Metrics and goals			35
					Table 4

4. MANAGEMENT OF CLIMATE-RELATED

RISKS AND OPPORTUNITIES

13

LIST OF TABLES

Rumo's climate-related physical risks

18

5.

STRATEGY

21

Table 1

Rumo's climate-related transition risks

19

Table 2

6.

METRICS AND GOALS

27

LIST OF FIGURES

7.

FINAL CONSIDERATIONS

29

Rumo's governance structure

Figure 1

8.

REFERENCES

30

for climate change

09

Mechanisms of Rumo's corporate

Figure 2

strategy management

12

Climate-related corporate risks

13

Figure 3

Overview of the process for identifying and

Figure 4

assessing climate-related risks at Rumo

14

Types of climate-related risks based on

Figure 5

TCFD classification

14

Geographic scope for the assessment

Figure 6

of climate-related physical risks

15

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INTRODUCTION	GOVERNANCE	CLIMATE-RELATED RISKS	STRATEGY	REFERENCES
CHANGE 2023	SUMMARY	AND GOALS	CONSIDERATIONS	SUMMARY TABLE
		AND OPPORTUNITIES

ACRONYMS AND ABBREVIATIONS

Acronyms	Description
APS	Announced Pledge Scenario
	Scenario of Announced Pledges from the World Energy Outlook of the International
	Energy Agency
BAU	Business as Usual
	Usual business activities
CBI	Climate Bonds Initiative
CEO	Chief Executive Officer
DJSI	Dow Jones Sustainability Indexes
	Corporate sustainability Index of New York Stock Exchange
ESG	Environmental, Social, and Governance
GHG	Greenhouse Gases
IEA	International Energy Agency
ISE	Corporate Sustainability Index of São Paulo Stock Exchange
IPCC	Intergovernmental Panel on Climate Change
KPI	Key Performance Indicator

Acronyms	Description
LTIF	Lost Time Injury Frequence
NDC	National Determined Contributions
NZE	Net Zero Emissions
	Scenario of Net Zero Emissions from the World Energy Outlook of the International
	Energy Agency
SDG	Sustainable Development Goals
UN	United Nations
RCP	Representative Concentration Pathway
	GHG concentration estimate
SSP	Shared Socioeconomic Pathways
STEPS	Stated Policies Scenario
	Scenario of Stated Policies from the World Energy Outlook of the International
	Energy Agency
TCFD	Taskforce on Climate-related Financial Disclosure
RTK	Revenue per ton kilometer
WEO	World Energy Outlook

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CHANGE 2023	SUMMARY	AND GOALS	CONSIDERATIONS	SUMMARY TABLE
		AND OPPORTUNITIES

DEFINITIONS

Term	Definitions
Net Zero Emissions	The Net Zero Emissions by 2050 Scenario sets out a pathway to the
Scenario (NZE)	stabilization of average global temperatures at 1.5 ºC above pre-
	industrial levels. It was updated in 2022 based on a higher level of
	demand for fossil fuels and emissions in comparison to the previous year
	and on one year less to achieve its ambitions. This scenario meets the
	key sustainable development goals of the UN, such as universal access
	to energy and improvements in air quality.
Announced Pledges	The Announced Pledges Scenario assumes that governments will
Scenario (APS)	implement in full and on time all climate-related targets that they
	announced, including Net Zero emissions goals, NDC-related pledges,
	specific areas (such as energy), those assumed in international forums
	and other efforts that might contribute to achieving these ambitions.
	This scenario is based on the analysis disclosed during COP26 in Glasgow
	(considering the implementation of all assumed pledges, Net Zero and
	Methane), supplemented by the outlook of those countries that have not
	yet assumed long-term ambitious pledges, but which will benefit from
	this accelerated scenario of transition to clean energy technologies.
Stated Policies Scenario	The Stated Policies Scenario does not take into account assumed
(STEPS)	pledges, but considers exiting public policies and actions that are in
	place for achieving their goals and targets. Therefore, this scenario is
	based on a detailed sector-by-sector assessment of relevant aspects,
	such as regulation, market, infrastructure, and finances. This scenario
	provides a guideline on the direction that the energy system might
	take in the absence of new efforts and policies. As with the APS, and
	differently from the NZE, this scenario is not designed to achievement
	a certain outcome.

Term	Definitions
Climate-Related	[TCFD] Potential positive impacts related to climate change on an
Opportunity	organization Efforts to mitigate and adapt to climate change can
	produce opportunities for organizations, such as through resource
	efficiency and cost savings, the adoption and utilization of low-emission
	energy sources, the development of new products and services, and
	building resilience along the supply chain. Climate-related opportunities
	will vary depending on the region, market, and industry in which an
	organization operates.
Climate-Related Risk	[TCFD] Potential negative impacts of climate change on an
	organization. Physical risks emanating from climate change can be
	event-driven (acute) such as increased severity of extreme weather
	events (e.g., cyclones, droughts, floods, and fires). They can also
	relate to longer-term shifts (chronic) in precipitation and temperature
	and increased variability in weather patterns (e.g., sea level rise).
	Climate-related risks can also be associated with the transition to a
	lower-carbon global economy, the most common of which relate to
	policy and legal actions, technology changes, market responses, and
	reputational considerations.
Physical Risk	[TCFD] Risks resulting from climate change that can be driven by extreme
	events (acute) or longer-term shifts (chronic) in climate patterns. Physical
	risks may have financial implications for organizations, such as direct
	damage to assets (direct impact) or supply chain disruptions (indirect
	impact).
Transition Risks	[TCFD] Risks resulting from the transition to a lower-carbon global
	economy. Transitioning to a lower-carbon economy may entail
	extensive policy, legal, technological, and market changes to address
	mitigation and adaptation requirements related to climate change.
	Depending on the nature, speed, and focus of these changes,
	transition risks may pose varying levels of financial and reputational
	risks to organizations.

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INTRODUCTION	GOVERNANCE	CLIMATE-RELATED RISKS	STRATEGY	REFERENCES
CHANGE 2023	SUMMARY	AND GOALS	CONSIDERATIONS	SUMMARY TABLE
			AND OPPORTUNITIES

1. INTRODUCTION

1.1 ABOUT THE REPORT

Welcome to the Report on Climate Change of Rumo S.A for 2023, which was prepared based on the recommendations from the Taskforce on Climate-related Financial Disclosures (TCFD), 20171.

This document explains how we are addressing the increasing challenges posed by climate change not only to our activities, but also to our surroundings.

The goal of our effort to advance this agenda based on the recommendations of the Taskforce on Climate- related Financial Disclosures (TCFD), is to explain how we have been working to ensure the resilience of our operations, as well as our commitment to addressing the material themes for the Company sustainability in 20232-which include Climate Change and Emission Management-based on a robust risk management to ensure the safety of our operations and the health and safety of our people and nearby communities, supported by a solid, transparent governance structure.

Likewise, this advancement will support the Ten Principles of the UN Global Compact and the 17 Sustainable Development Goals (SDG), to which we are signatories3 and on which the 10 commitments we made in 2020 are based upon4, as shown below:

1. TCFD Recommendation, 2017
2. Annual Sustainability Report 2023
3. Rumo S.A. | UN Global Compact
4. Our commitments with Sustainable Development | Rumo

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			AND OPPORTUNITIES

Ensure the safety of teams, processes

01 and operations, reflected in our LTIF index, whose average should be 0.15 in the period up to 2025.

Promote and encourage energy

02 efficiency, seeking to mitigate the impacts of climate change and reduce emissions per RTK by 15% by 2023.

Promote gender diversity in selection

03 processes and succession maps, in addition to continually developing people. In this aspect, we are committed to increasing the employee satisfaction rate from 78% in 2019 to 82% by 2025.

04	Spread ethical values among​ everyone
on the team and in the value chain.

Seek forms of financing linked to

05 sustainability criteria (Green/Social/ Transition/ESG-related).

	Contribute	to	the	sustainable
06
development	of	Brazil,	protecting
	natural resources with attitudes that
	seek business continuity and generating
	a positive impact on the communities
	surrounding the operations.

Promote transparency in relation to

07 business management and in alignment with sustainability aspects.

08	Encourage innovation in the business
and stakeholders.

Encourage the supply chain to promote

09 sustainability.

10	Promote sustainability actions together
with customers.

As the largest independent railway logistics operator in Brazil, operating in the Middle West, South, Southeast, and North regions of the country, serving the three most important export corridors for agricultural commodities, and main ports (Santos (SP), Paranaguá (PR), São Francisco do Sul (SC), and Rio Grande (RS)), we conducted a comprehensive risk assessment study on climate-related physical impacts, including all ports and regions where we operate.

Since the transport sector still relies heavily on the intensive use of fossil fuels, our approach to risks related to the transition to a low-carb economy aligns with the company's growth strategy and with the development of new technologies to enhance energy efficiency.

REPORT ON CLIMATE

EXECUTIVE

MANAGEMENT OF

METRICS

FINAL

APPENDIX A: TCFD

7

INTRODUCTION

GOVERNANCE

CLIMATE-RELATED RISKS

STRATEGY

REFERENCES

CHANGE 2023

SUMMARY

AND GOALS

CONSIDERATIONS

SUMMARY TABLE

AND OPPORTUNITIES

2. EXECUTIVE SUMMARY

We are the largest railway operator in the country, with a network of more than 13.5 thousand kilometers extending across regions Middle-West, South, Southeast, and North, serving the most important export corridors for agricultural commodities. Responding to the increasing challenges posed by climate change has become critical to ensure the resilience of our operations and the sectors where we serve. Additionally, the railroad transport mode is a safest and efficient logistic solution that can significantly contribute to the decarbonization of the transport sector, addressing challenges posed by the transition to a low-carb economy.

Therefore, the recommendations of the Taskforce on Climate-related Financial Disclosures (TCFD) relate to the material themes for the Company sustainability in 20231 -which include Climate Change and Emissions Management-as well as to our commitments that are aligned to the Ten Principles of the UN Global Compact and the 17 Sustainable Development Goals (SDG).

These commitments are based on leveraging investments to expand the benefits of the railway for the value chain way while gradually reducing carbon emissions in our operations. They are reflected in our strategy, which is focused on aligning the business growth to the addressal of climate changes to meet the needs of our clients and market expectations, through which we can expand our operations.

For that purpose, we rely on a climate-change governance structure that strategically addresses the theme. This structure is led by the Board of Directors, which, with the support of the Strategic and Sustainability Committee discuss about the strategy and the monitoring of progress against climate- related goals quarterly. This governance structure has driven the interaction across all areas of the company (administrative, technical, and operational), leading to better internal collaboration and building multidisciplinary teams within the Strategic and Sustainability Committee.

12Annual Sustainability Report 2023

REPORT ON CLIMATE

EXECUTIVE

MANAGEMENT OF

METRICS

FINAL

APPENDIX A: TCFD

8

INTRODUCTION

GOVERNANCE

CLIMATE-RELATED RISKS

STRATEGY

REFERENCES

CHANGE 2023

SUMMARY

AND GOALS

CONSIDERATIONS

SUMMARY TABLE

AND OPPORTUNITIES

The process for identifying, assessing, evaluating, and managing climate-related risks and opportunities that was completed in 2023, allowed us to reinforce the insights on certain risks. The identification of risks and opportunities followed the TCFD recommendations and main climate model references, such as the Intergovernmental Panel on Climate Change (IPCC) and the International Energy Agency (IEA).

To further the business value generation, we have goals linked to our 10 Commitments to Sustainable Development, which address relevant themes for the Company value generation. These goals are based on efforts that aspire to make a difference in Brazilian logistics, people's lives, and our operations. Also, starting in 2021, ESG goals have been set out for all employees, related to the variable compensation of the Company, including the reduction in specific emissions.

After identifying and evaluating the risks and opportunities related to climate change, due to the relevance of the topic, we will continue on our journey by sharing the results with relevant areas to establish prioritized action plans.

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CHANGE 2023	SUMMARY	AND GOALS	CONSIDERATIONS	SUMMARY TABLE
			AND OPPORTUNITIES

3. GOVERNANCE

FIGURE 1: RUMO'S GOVERNANCE STRUCTURE

General Shareholders' Meeting

Independent Audit

Fiscal Council

Board of Directors

Executive

Operational

Personnel, Appointment and

Related-Party

Board

Committee

Remuneration Committee

Committee

Financial and Investor

Ethics

Negotiation and Disclosure

Executive

Relations VP

Committee

Committee

Legal Board

Strategic and

Sustainability Committee

Legal

Compliance

Financial

Committee

Statutory Audit

Committee

Internal		Risk
Audit		Management

As a publicly-traded company listed on the Brazilian stock exchange B3 since 2004 and part of the Novo Mercado listing segment since 20141, we are committed to the highest standards of corporate governance, which includes four major bodies: General Shareholders' Meeting, Board of Directors, Audit Committee, and Executive Boards.

Our commitment to promoting sustainability through the development of the Brazilian infrastructure and the continuous pursuit of best practices has resulted in our choices to compose the major sustainability

indexes: inclusion in the Dow Jones Sustainability World and Emerging Markets Indexes of the S&P Global's Corporate Sustainability Assessment on 12/08/20232 and 3rd consecutive year in the Corporate Sustainability Index of São Paulo Exchange (B3 ISE).

As we are aware of the scenario created by climate change in our sector and business, this subject is treated strategically by our top leaders, let by the Board of Directors with the support of the Strategic and Sustainability Committee, which is responsible for addressing sustainability and ESG themes, including

risk management, its actions, objectives, and goals. The committee members meet quarterly to track the progress against what was previously decided and report that to the Board of Directors. Also as part of the Board of Administration attributions, the CEO and the members of the Executive Board support the making of strategic decisions about the sustainability and ESG agenda and help to implement and monitor the steps required to achieve the planned outcomes.

1. Listed companies | B3.
2. Companies | DJSI World & Emerging Markets Indexes.

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CHANGE 2023	SUMMARY	AND GOALS	CONSIDERATIONS	SUMMARY TABLE
			AND OPPORTUNITIES

According to the company's internal regulations, the Board of Directors consists of 10 fuul members, with 3 independent members and is supported by 6 Advisory Committees: Operational; People; Appointment and Compensation; Stakeholders; Finance; Statutory Audit; and Strategic and Sustainability. As part of the attributions of the Board of Directors, the climate change agenda was integrated into the corporate governance mechanisms, which include the assessment of and guidance on:

• strategies;
• actions plans;
• risk management policies; and,
• quarterly monitoring and supervision of progress against actions and goals related to climate change.

The CEO periodically monitors the strategies and goals that were set out, including those related to climate change, and, in conjunction with the Executive Board, assesses the impacts of climate-related risks and opportunities;

The Statutory Executive Board consists of 1 (one) Chairman and 4 (four) Vice-presidents (Financial VP and Investor Relationship Director, Operation VP, Commercial VP, and Regulation and Expansion VP), who are responsible for managing operations and implementing the policies and actions required to achieve the goals set out by the Board of Directors;

The Strategic and Sustainability Committee is currently composed of 3 (three) members- one of them independent- with terms concurrent with the Board of Directors. This committee is responsible for addressing matters related to business sustainability and ESG by setting out, implementing, and monitoring strategies, policies, projects, goals, and actions to drive investments, communications, and possible partnerships; and

The Strategic and Sustainability Committee addresses topics related to the 6 material themes listed below, which were identified during the review of our materiality matrix in 2023. These topics were previously addressed in specific forums involving representatives of the subject areas;

MATERIAL THEMES, 2023:

1. Climate Change and Emissions

Management

2. Safety and Operational Risks

3. Governance and Ethics

4. Community Relations

5. Human Rights

6. Diversity, Equity and Inclusion

Theme Climate Change and Emissions Management remained as material and relevant during the review of the materiality matrix (2023), either due to the intensive use of fossil fuels, which is characteristic of this sector, or to the strong link with climate-dependent sectors, such as agribusiness, becoming a core theme in our corporate strategy.